Early deficits Government budget balance

united states deficit or surplus percentage 1901 2006.

before invention of bonds, deficit financed loans private investors or other countries. prominent example of rothschild dynasty in late 18th , 19th century, though there many earlier examples (peruzzi family).

these loans became popular when private financiers had amassed enough capital provide them, , when governments no longer able print money, consequent inflation, finance spending.

however, large, long-term loans had high element of risk lender , consequently gave high interest rates. governments later began issue bonds payable bearer, rather original purchaser. meant lent state money sell on debt else, reducing risks involved , reducing overall interest rates. examples of british consols , american treasury bill bonds.